Obama on Bush's Tax Cuts

Senator Obama appeared on ABC's "This Week" this morning and stated that he would delay his tax increases on "wealthy" Americans if he is elected President and takes office when the economy is in a recession.

His latest stance is a shift from what he has repeatedly said in the past, as recently as the Democratic National Convention. Obama has promised to raise taxes on wealthy households (those making more than $250,000) by allowing the Bush tax cuts to lapse for the top two tax percentiles. This would mean an increase of between 3% to 4.6%. (For those of us confused by this kind of stuff, I've done some research and posted my findings under the "Practical Explanation" section.)

Obama's stance doesn't make sense. He claims that raising taxes on the wealthy would benefit governmental coffers and not seriously impact the lives of "rich" Americans... Then why delay the cuts? Unless he thinks that raising taxes on wealthy Americans would slow or halt economic growth. In which case, why raise their taxes at all? Why not leave them the same or (better yet) cut them more, as McCain has been suggesting since the beginning of the campaign?

::Pracitcal Explanation::

A household earning $250,000 currently pays 33% of their income to the federal government. That's approx. $82,500 before deductions. Under Obama's plan, that 33% would rise to at least 36% (the pre-tax cut level), meaning that the same family would owe the government $90,000, a $7,500 increase.

This increase would also apply to S-Corps. S-Corps are usually small businesses incorporated to protect the business owner who still files business earnings or losses as personal income.